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In the midst of this crisis, one silver lining is the realisation that, faced with an emergency, we are still able to rapidly and radically pull together. Even my native Belgium with its Byzantine governance structure managed to overcome its divisions to impose unprecedented restrictions on business and citizens. Surprisingly, along with all the angst and anxiety there’s also a sense of unity, solidarity and purpose. Together we can overcome the health crisis.
But whilst we do so our economy is going into a recession which could easily turn into something much worse. Events are cancelled, restaurants closed and small businesses forced into shutting down for weeks, whilst consumption and manufacturing will slump. (UberEats, Zoom video conferencing, Netflix, and toilet paper makers are the exception.) Perhaps some think the corona crisis shows the way out of the transport emissions problem – planes are grounded, people are teleworking on an unprecedented scale, travel has been cut drastically. But this is misguided. We are witnessing a tragedy and the beginnings of significant hardship for people and businesses across Europe.
Europe is now facing a question that will determine its future. How do we deal with the economic crisis? And can we salvage the Green Deal?
Let’s start with the big picture. No-one is really to blame for this crisis. It isn’t the profligate southerners, perfidious bankers or stingy northern Europeans that got us into this mess. This is force majeure. Perhaps that will help avoid a repeat of the senseless austerity that was imposed on countries like Greece and Italy after the 2008 economic meltdown. Renewed austerity would not just increase hardship and unnecessarily prolong the crisis; it would pose a significant risk to democratic politics.
Ursula von der Leyen’s promise of maximum budgetary flexibility for Italy is a first good step. But once we get beyond immediate relief, we’ll need something much bigger to avoid this becoming a full-blow depression. That bigger recovery plan needs to be in line with the recently launched European Green Deal and the EU industrial strategy. However, the jobs and economic development part of the Green Deal now needs to become even stronger. We need a new Green Deal.
The recovery plan should provide relief, protect jobs and help healthy business weather the storm. Above all it should create new jobs to replace old ones that couldn’t be saved. Our financial resources are not limitless so choices will have to be made. So we should not burn all our scarce resources trying to restore the order which existed before this crisis – instead we should focus on accelerating the green transition. That means governments should avoid creating an economic stimulus that encourages developments which lock in future carbon emissions like additional road building, bigger airports or purchase incentives for diesel and petrol cars.
Neither should we follow the opportunistic advice of some carmakers which are shamelessly suggesting we should ditch the 2020-2021 EU CO2 standards as we explain in this article. Lower standards and reduced investment in cleantech are unnecessary in the immediate term and are the surest way to economic irrelevance for Europe in the long run.
Measures like tax relief, bridging loans, subsidised temporary unemployment or scrappage schemes are already being rolled out or considered. A smart recovery plan would make support conditional on carmakers continuing to transition to zero emission vehicles and on investment in Europe. When Obama saved General Motors and Fiat Chrysler in 2009 the prize was them agreeing to the most ambitious CO2 standards ever – and it was a deal that served carmakers very well.
The same principle should be applied to the aviation industry which is being dealt a huge blow by the Corona crisis. The main point is that airlines can’t demand public help in bad times if during the good times they refuse to pay taxes and contribute to the climate effort. So any bail out or support scheme should be conditional on taxes and clean fuel policies kicking in once the recession is over.
Europe is about to go through a rough period. If we pull together we can overcome the health crisis. If we are intelligent we can minimise hardship and focus limited resources to emerge greener, stronger and more resilient from the economic shock that awaits us.